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Rules on pay disclosure to be tightened

TENS of thousands of investment bankers could be forced to disclose the size of their pay packet, in a government move that will send shock waves through the City.

City minister Lord Myners yesterday revealed government plans to further tighten policy proposals first put forward by Sir David Walker in a corporate governance report last year.

The threshold for remuneration disclosure is now set to be slashed to just £500,000, half the £1m limit originally recommended by Walker.

“Remuneration remains contentious and the UK cannot be accused of shirking this difficult challenge,” Myners said. “We will continue to lead on this issue. David Walker’s proposals will be implemented to give shareholders much more power and information to shape remuneration policies at banks, and in some cases we may go further.”

The government is due to open consultation shortly on the issue, which is expected to affect tens of thousands in the City.

Under the draft proposals, banks are likely to have to reveal how many staff fall into staggered pay brackets starting at £500,000 a year, though individuals will not be named.

The brackets ascend in £500,000 intervals up to £5m, and are spaced at £1m thereafter.

The plans come after a number of City banks revealed sizeable bonus pools for the 2009 financial year. Barclays last month handed out £2.7bn to its 144,200 employees, with the average bonus in its investment banking division Barclays Capital coming in at £95,000.

And though Royal Bank of Scotland coughed up just £1.3bn in discretionary compensation, the average bonus in its investment bank was £73,000 and over 100 bankers received a bonus in excess of £1m.